Commodity Checkup: Export Surprise, Old-Crop Reality Check

From a soybean export surprise to the need for farmers to take care of in-the-bin crops before 2014 planting, the markets haven't been short on news this February.

First Capitol Ag’s Mike North shared his thoughts on those subjects and more before a U.S. Farm Report Market Roundtable taping at the 2014 National Farm Machinery Show. Click the play button below to hear more or scroll down to read excerpts from his comments:

Soybean export surprise

"From a fundamental standpoint, the export conversation has been a prominent one in the last three to four weeks. On the soybean side, everyone’s been expecting cancellations on cargoes to China as they begin to take on South American production. That didn’t happen in the way that most people had expected or had prepared for. That gave a little support to the soybean market."

How to handle the old crop

"Get it out of the bin, or price it for delivery later. This rally’s been a gift in that regard. We’ve gotten back close to where we were for fall. This is an opportunity for producers to step back in and start getting some things priced. As you look forward in the soybean market, there is no carry. It’s a discount market. The further out you go, the less the beans are worth, and for you to pay a storage cost in order to get a lesser price doesn’t pencil out."

Growing ending stocks means lower prices

"As you look at the numbers for what they are going forward in 2014, we are going to continue to grow our balance sheets this year unless interrupted by Mother Nature. The bottom line in that story is that growing ending stocks generally lead to lower prices. Most people, as they look at $11 soybeans and they look at $4.50 corn, they are not excited about selling into those markets because they’re used to much larger numbers in recent years.